WEBVTT - Lucid Interim CEO Marc Winterhoff Talks Panasonic Partnership

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>We're live in DeSoto, Kansas at Panasonic's brand new EV

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<v Speaker 2>battery plant four point seven million square feet at full capacity,

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<v Speaker 2>which will happen later this year. So news we broke

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<v Speaker 2>with Panasonic's North America CEO Megan Young one lee thirty

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<v Speaker 2>gig or hours of capacity. That's enough cells for five

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<v Speaker 2>hundred thousand EV's Parana one of the key customers Lucid,

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<v Speaker 2>and Lucid CEO Mark went Off Interim CEO Mark winter

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<v Speaker 2>Off is with us. Now. This is a significant moment

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<v Speaker 2>for you as well, because your first domestic supply of

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<v Speaker 2>cells reflect on that.

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<v Speaker 1>That is true. Yeah, So currently we're getting our battery

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<v Speaker 1>supplies either from Japan or from Korea, depending on the supplier,

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<v Speaker 1>and Panasonic is a great partner for us. We decided

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<v Speaker 1>two and a half years ago to make together this

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<v Speaker 1>investment here and to localize the production. That's hope for

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<v Speaker 1>bugs from here to country.

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<v Speaker 2>It's not just volume supply. This is twenty one seventy.

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<v Speaker 2>But my understanding is there were some co engineering to

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<v Speaker 2>make this as good as it can possibly be. Explain

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<v Speaker 2>how that works.

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<v Speaker 1>It's a great collaboration between our engineering departments and their

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<v Speaker 1>engineering department. We bring in a lot of experience on

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<v Speaker 1>what this cell is supposed to do in real life,

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<v Speaker 1>and they make it happen with you know, chemistry and

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<v Speaker 1>with all of the parameters of the cell. So it

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<v Speaker 1>was really really great collaboration. And that we also then

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<v Speaker 1>are able now to produce us here locally obviously in

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<v Speaker 1>the current climate, helps us a lot.

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<v Speaker 2>How did the economics of the DeSoto Candice May twenty one,

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<v Speaker 2>seventy stack. I know that you love charts and spreadsheets

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<v Speaker 2>as much as I do, but you must have done

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<v Speaker 2>that analysis.

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<v Speaker 1>Yeah, absolutely, I mean, like I would say, we wouldn't

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<v Speaker 1>have done it if it wouldn't be economically feasible or beneficial.

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<v Speaker 1>As I mentioned before, we made that decision, not just

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<v Speaker 1>recently so terriffs were not on the radar screen at

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<v Speaker 1>that time. We did that decision two and a half

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<v Speaker 1>years ago, and at that time, together with the forty

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<v Speaker 1>five x incentive text credit, the economics make sense. I

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<v Speaker 1>still have to say, and I hope the Panasic sonic

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<v Speaker 1>here's that that you know, there's some room of improvement.

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<v Speaker 1>But also right now, obviously with the tariffs, this is

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<v Speaker 1>a very good move for us.

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<v Speaker 2>Because the same cell that would otherwise have come from

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<v Speaker 2>Japan or Career is subject to tariffs. It is that's

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<v Speaker 2>a part of the equation that is correct.

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<v Speaker 1>And the other thing that we are currently working on

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<v Speaker 1>together with Panasonic is obviously further localizing the supply chain

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<v Speaker 1>for the cell, because it doesn't do you a lot

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<v Speaker 1>of good if your manufacture here, but you still import

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<v Speaker 1>the raw material, which is then subject to teriffs. So

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<v Speaker 1>we're already doing a lot of investments in that. You

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<v Speaker 1>heard about our graphite one investments on the graphite and

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<v Speaker 1>other materials, so we're working with them on making that

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<v Speaker 1>happen as well.

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<v Speaker 2>Mark, I've covered Lucid for a number of years. This

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<v Speaker 2>is the first time you and I have spoken, and

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<v Speaker 2>I'm grateful for your time. Your predecept sessor Peter Robinson

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<v Speaker 2>had a very simple argument. Lucid had the best technology

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<v Speaker 2>on the hardware side and software battery management system. And

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<v Speaker 2>even though your journey started in the premium segments, that

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<v Speaker 2>you would scale to volume because you would just say

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<v Speaker 2>this performance and range in this pack, we can just

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<v Speaker 2>scale it down make a more affordable version. Have we

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<v Speaker 2>hit that inflection point yet?

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<v Speaker 1>Well, I mean we're about to you know, everybody knows

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<v Speaker 1>by now that follows loserd that you know, we are

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<v Speaker 1>very very strongly working on our mid sized platform, right,

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<v Speaker 1>which is a you know, smaller platform also from a

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<v Speaker 1>price point perspective, more in the round, in the fifty

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<v Speaker 1>thousand dollars range and not where we are right now,

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<v Speaker 1>and that's when we really hit that inflection point. But

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<v Speaker 1>mister gravity that we are ramping up right now, we're

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<v Speaker 1>already expecting to have much higher numbers that we had.

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<v Speaker 2>In the past, right, I think, you know, there's a

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<v Speaker 2>lot of work to do in the second half of

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<v Speaker 2>the year to reach twenty thousand. What role does the

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<v Speaker 2>DeSoto plant play. Will you be able to get hold

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<v Speaker 2>of sales from here for vehicles sold or delivered in

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<v Speaker 2>this calendar year?

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<v Speaker 1>No, not yet, okay, so something that is something for

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<v Speaker 1>next year. And again with our partners with Panasonic, we

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<v Speaker 1>are working on opportunities to further bring this in because

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<v Speaker 1>obviously in the current climate, that is very important for

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<v Speaker 1>us to localize.

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<v Speaker 2>We've focused this morning a lot on policy. You've brought

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<v Speaker 2>up the forty five X credit, but the consumer credit

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<v Speaker 2>of seven thousand, five hundred dollars likely no more. What

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<v Speaker 2>can you do in that environment with the vehicle? Are

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<v Speaker 2>you able to pull forward lower price point variant? Are

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<v Speaker 2>you looking to just appeal to the premium segment on

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<v Speaker 2>an ongoing basis.

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<v Speaker 1>Well, first of all, when it comes to our our

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<v Speaker 1>current vehicles with the Air, it might not be widely known,

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<v Speaker 1>but we are the best selling vehicle in our segment,

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<v Speaker 1>the best selling ev and we also were in the

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<v Speaker 1>second half of last year. Actually know, in the beginning

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<v Speaker 1>of this year, we were the best selling vehicle in

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<v Speaker 1>the whole segment, including ice vehicles. So the Air is

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<v Speaker 1>actually doing well, although the numbers are obviously when you

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<v Speaker 1>look at the broader scheme of things, I'm not that

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<v Speaker 1>high yet, but that's because of the size of the segment.

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<v Speaker 1>With gravity, obviously, we're now reaching a different scale and

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<v Speaker 1>we're still ramping up the production and as you said,

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<v Speaker 1>we have to do quite a lot in order to

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<v Speaker 1>get to our target for this year. But it's going well.

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<v Speaker 1>We're unclocking some of the blockages that we had in

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<v Speaker 1>the supply chain, and our plant really got into the

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<v Speaker 1>groove to create the vehicle. So I would say the

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<v Speaker 1>inflection point of having really economics of scale is still

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<v Speaker 1>a little bit out. We're still were appealing to the

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<v Speaker 1>higher price segment. That's what we have. And I mean

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<v Speaker 1>in automotive, you cannot just decide, oh, let's let's put

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<v Speaker 1>out a new cheaper variant next week. It takes ten

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<v Speaker 1>years to implement, to plan, to engineer, to validate. So

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<v Speaker 1>that's that's sometimes you know, not well understood that manufacturing

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<v Speaker 1>and then building great cars is a long term game.

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<v Speaker 1>You have to build also, economics of scale over time.

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<v Speaker 1>It's not something that happens from one day to the odd.

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<v Speaker 2>I'll hold you to it. Twenty thousand is realistic this

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<v Speaker 2>year with the time left to you.

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<v Speaker 1>We're in a quiet period right now, so I cannot

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<v Speaker 1>really talk about it. I suggest you tune in in

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<v Speaker 1>our earnings call on August fifth. I will do and

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<v Speaker 1>you will definitely hear about it.

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<v Speaker 2>And the mid sized platform is on track for next year.

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<v Speaker 1>And the same applies to that as well. We're working

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<v Speaker 1>very hard, but on August fifth there will be news

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<v Speaker 1>on them.

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<v Speaker 2>The other part of Lucid's history was idea of partnerships,

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<v Speaker 2>manufacturing partnerships licensing technology. Has that idea change given the

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<v Speaker 2>political environment.

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<v Speaker 1>No, actually no, it hasn't so as a matter of fact,

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<v Speaker 1>And I said that in the last couple of months,

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<v Speaker 1>and everybody honestly understandably asked me, okay, where is it?

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<v Speaker 1>Where is it again? Those things take time, and particularly

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<v Speaker 1>in the last couple of months with the uncertainty of

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<v Speaker 1>the terrorists. Have to say, many of the people we

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<v Speaker 1>had conversations was to have other issues, you know, they

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<v Speaker 1>have pressing things to solve right now. In the last

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<v Speaker 1>quarter we also, on top of that, had you know,

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<v Speaker 1>the magnet shortage which actually halted production for several players.

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<v Speaker 1>So those discussions still happen on our EV court technology,

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<v Speaker 1>but also beyond that, stay tuned, there will be other

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<v Speaker 1>news also.

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<v Speaker 2>Those potential partners, though motivated by the environment, the effort

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<v Speaker 2>to onshore industry in this country exactly to work with American.

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<v Speaker 1>Yeah, they're different, they're different things. First of all, Right now,

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<v Speaker 1>with the let's say perceived slow down of EV adoption,

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<v Speaker 1>especially companies that have both ice vehicles and evs, they

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<v Speaker 1>can only invest the dollar once. So right now we

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<v Speaker 1>see let's say shrift back to ice vehicles and therefore,

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<v Speaker 1>but they still need to come out with new models,

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<v Speaker 1>and therefore we have increased interest in Hey, can we

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<v Speaker 1>do things together? So and I expect this to continue.

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<v Speaker 2>Actually, you talked to a moment ago about being dominant

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<v Speaker 2>in your segment, the lead seller in that segment. But

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<v Speaker 2>everyone always asks me if somebody is put off buying

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<v Speaker 2>a tested vehicle, I drive a tested vehicle or model.

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<v Speaker 2>Why But there are many out there that say I

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<v Speaker 2>don't want to buy a tested vehicle. Have you any

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<v Speaker 2>data that says those buyers turn to Lucid in the

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<v Speaker 2>pure play categories that you operate in.

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<v Speaker 1>Yeah. Absolutely, I mean, as I just said, we're now

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<v Speaker 1>the best selling vehicle in the United States in our

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<v Speaker 1>segment that includes the model, our segment. I mean I

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<v Speaker 1>don't compare right now the gravity because we're still ramping up.

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<v Speaker 1>We're in the phase of ramping up. I guess let's

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<v Speaker 1>talk again by the end of this year where we

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<v Speaker 1>stand on the gravity. But the ear Yes, we see

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<v Speaker 1>a lot of incoming. We always actually, by the way,

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<v Speaker 1>had a lot of interest Fumpter's love byers. It's not

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<v Speaker 1>really new, but it has increased. Absolutely.

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<v Speaker 2>This administration is fascinating in Lucid's contexts. Maybe the pro

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<v Speaker 2>EV policy is not there, but supporting US manufacturers is.

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<v Speaker 2>You also have the relationship with Saudi Arabia, and the

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<v Speaker 2>administration in the context of GPUs for example, has been

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<v Speaker 2>supportive in those trade deals. What has the experience been

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<v Speaker 2>like leading this company under the Trump administration in net,

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<v Speaker 2>how do you think you've come out so far?

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<v Speaker 1>Well? I mean, obviously things became more complicated. I mean

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<v Speaker 1>the the tariff situation. I mean, there's no doubt it

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<v Speaker 1>increases our cost and it also creates a lot of

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<v Speaker 1>additional headache because you now have to completely rethink the

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<v Speaker 1>supply chain. Are you continuing certain things or are you localizing? Again,

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<v Speaker 1>that's nothing that happens from one day to the other.

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<v Speaker 1>We are doing okay when you compare to other players

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<v Speaker 1>in the industry. Also from the cost increases, particularly because

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<v Speaker 1>we build everything right now in the United States, and

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<v Speaker 1>we build all of the vehicles, our key components, they're

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<v Speaker 1>all built here in the United States. Having said that,

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<v Speaker 1>we are hit by obviously raw materials or let's say

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<v Speaker 1>Tier two suppliers that we have to import and we

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<v Speaker 1>have to pay teriffs on that. So it's not that

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<v Speaker 1>we are not impacted, but we are less so than others.

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<v Speaker 1>So yeah, I mean it's something we have to do

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<v Speaker 1>to work with and for us, it's also because we

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<v Speaker 1>are a pure EV manufacturer. We believe in the future

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<v Speaker 1>of electrical propulsion. We're not wavering. We're not saying, oh,

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<v Speaker 1>let's do I don't know a range extender or something

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<v Speaker 1>that is not going to happen with LUCID. This is

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<v Speaker 1>part of our vision. You know that this is the

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<v Speaker 1>future and actually important to save our planet. So we

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<v Speaker 1>will find a way through this. But also have to say,

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<v Speaker 1>for the American consumers, vehicles are going to be more

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<v Speaker 1>expensive under the terriff region. There's no other way around it.

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<v Speaker 1>There is. Yes, you can say, oh, you just need

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<v Speaker 1>to localize, well, yes, but that still increases the costs

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<v Speaker 1>because there's a reason why the supply chain is so

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<v Speaker 1>global because certain things are either not available here in

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<v Speaker 1>the US or are just very expensive, so you import them,

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<v Speaker 1>and if you change that, you still have higher cost

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<v Speaker 1>in the United States, which means manufacturers like US are

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<v Speaker 1>actually any manufacturer has to increase prices. There's no other

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<v Speaker 1>way unless you want everybody to be nonprofit organizations, which

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<v Speaker 1>then would lead to no innovation, no technology leadership, and

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<v Speaker 1>I think that's in the current climate. Globally, it's the

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<v Speaker 1>last thing we want.

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<v Speaker 2>The cost of doing business in America. Mark winter offf

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<v Speaker 2>Loucids Interim CEO, one of the core customers at this

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<v Speaker 2>Panasonic De Soto, Kansas plant that is due to hit

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<v Speaker 2>full capacity this year